Some banking clients have had enough with their banks. The time when most consumers would just stick it out with their banks despite some issues that they might have is slowly coming to an end. In a recent survey by the Interbrand Corp., a third of the respondents claim that they are ready to ditch their current financial institutions and make the switch to a “better” one.
While convenience remains to be the top reason why clients are likely to go to another bank, other factors have moved up the list when it comes to a bank’s ability to retain their existing customers.
- Convenience and location. In this day and age when everything seems to be moving at such a fast pace, consumers still put a high price tag to being able to bank conveniently. This is also the reason why online banks and the related services that they can offer such as online bill pay and account transfer are gaining more and more customers nowadays.
- Trust and confidence in a bank. The current banking crisis has made the public more conscious of the financial stability of their banks. While deposit accounts of up to $250,000 are insured by the FDIC, bank customers are still wont to prefer banks which are perceived to be financially sound.
In the Interbrand survey, banks that suffered from negative publicity and doubts about their ability to weather the crisis were most affected. Citigroup got the least rating at minus 13%, while Bank of America which also suffered from a lot of bad press of late still managed to get a +2% rating. Chase Bank rated a slightly higher 3%.
- Poor customer service. Now more than ever, customers have become more particular about getting the service that they feel they deserve. The J.D. Powers 2009 Bank Survey reveals that a “positive personal experience with the bank” is a principal key to gaining the loyalty of that client.
Mortgage payments and rising credit card interest rates and fees have become sore points with consumers these days and every instance of customer service interaction (phone call, email correspondence, or bank visit) will serve as a gauge of the bank’s sincerity to helping its customers.
- Higher interest rates, more flexible loan rates and terms elsewhere. With times as tough as they are, many consumers also care a great deal about maximizing their interest earnings on deposits and spending as least as possible on credit interest rates and other bank fees.
- Cash bonuses, rewards points, and other promo offers. It’s quite surprising that despite the onslaught of cash bonuses and gift item promos enticing banking customers to open new accounts at very minimal deposit amounts, this reason for transferring to another bank still ranks quite low in the list. And then again, perhaps consumers have become more financially-savvy and just open additional accounts whenever a worthwhile promotional offer comes along.
- Bank mergers and/or acquisitions. While the healthiest of banks have a distinct advantage over their beleaguered peers when it comes to the public’s preference for financial stability, even these institutions can face customer runoffs if the integration process with merged or acquired banks is not handled well.
The defections are rarely felt during the first year or upon announcement of the merger, but when the actual integration starts, this is where customers of the acquired bank usually go off in search of another bank if they are not comfortable with the new systems.
My Bank Tracker team would like to hear from you about why you switched your last bank – please comment below.